Financial planners assume that retirees have a strong preference for consistent, predictable spending. Their widely used rule of thumb, the 4% rule, was developed to identify the maximum spending level that could be maintained throughout retirement. In stark contrast, the standard advice from...

This paper compares the relative strengths of working longer vs. saving more in terms of increasing a household's affordable, sustainable standard of living in retirement. Both stylized households and actual households from the Health and Retirement Study are examined. We assume that workers...

Ratchet consumers want their spending to always increase and never decrease. We find an optimal consumption rule for ratchet consumers by maximizing an expected utility that eschews spending declines, yet permits a range of choices for felicity and time preference functions. This solution can be...